Tax Planning
HAND IN HAND WITH CAREER PLANNING
Today we sat with our financial planner and he took us through how we can maximise our earnings and investments to help us reach our goal of retiring at 55, securing our future and ensure our children's are well maintained.
As he took us through the report, I found myself with a sense of overwhelm and annoyance that it had taken me 11 months to get our shit sorted to follow on from our previous meeting due to work noise preventing us to focus on this properly and now meaning that we haven’t maximised this financial year to its full potential.
That's done now, so moving on….
It got me thinking, as we are all racing to the top dog position to earn more money and with that seemingly a better life, but are we working smartly to maximise our own wealth whilst we are busy making money for other people in our respective lines of work? Are we taking the time to stop and take time out for themselves to think about what needs to be done to really future proof ourselves so we can enjoy our lives in the knowledge that we won't have money worries (and superannuation alone just ain't going to cut it folks).
Which brings me to a life lesson that when working on your career and development plans each year, you should also be working on your tax plan to ensure that you are maximising your return on investment (that is yourself) to allow you to really realise the long-term benefit of all this hard work.
Tax planning is as important as setting the revenue projections for the year and isn’t just for business owners (but many business owners could learn a thing or two here). So as we finish up this financial year and move into the next, now is a good time to start your tax plan. A few tips from me to get you started:
Have clear goals for your future and that of your family before you start out – earning $250,000 next year doesn’t matter because the reality is if you don’t have a plan I can tell you the person next to you earning $50, 000 with a plan may be much better off than you in the long run
Make sure you have a budget for your household and treat it like any other work budget, make sure you reconcile against each line item each month. In other words, stick to it or look to finding efficiencies so that you can gain in other areas.
If you have superannuation all over the place (I did), roll it into one and one that provides you with maximum return for your fees (tip – look into the life insurance and TPD it may not cover as much as you think but there are funds that do)
Get on top of what is happening with superannuation and the restrictions that may be come in. What can you do NOW to maximise your return (sole traders understand how much you can invest into super and claim back at tax time)
Know what you can and cannot claim – for example, did you know sole traders can claim up to $300 on their work bag (and if you are an employee you can claim a portion of the purchase up to $300)? As long as you are using it for work to house an iPad or laptop and keep a log of your meetings that the bag went, it’s a small clerical task to ensure you can buy a good quality work bag
Keep on top of your expenditure. Whether you are an employee, sole trader or a small to medium business employing staff, don’t spend for the sake of it. Ensure you are controlling your spend and that spend is a viable tax offset. Don’t make stuff up.
Get yourself a bloody good accountant and do your tax planning together. Accountants add so much more value than just completing your tax return.
Above all don’t be scared of tax and investing. I have learnt that quickly thanks to an amazing accountant and now financial planner who is working with us as a team to ensure that we have something to show for all our hard work in our respected careers.
What are you waiting for? Time to reconcile your career plan and tax plans now!
Giovanna is not an accountant – these opinions are her own.
